It might not have felt like it, but households saw an average £21 per head increase in income between the second and third quarters of last year, according to official statisticians.

The income figure includes salary, pensions, benefits and savings and investment returns - but also the value of benefits in kind from the state, such as education and health services.

Income excluding these benefits in kind grew by a far more modest £8 in the period, the Office for National Statistics (ONS) found. Even so, it still marked a rise at a time when many workers have seen wages frozen..

The ONS said salaries and social
benefits 'made a substantial positive contribution', indicative of 'an
improving picture in the labour market'.

This was supported by an increase of 87,000 in the number of employees in the third quarter, it added.

The largest contribution to the rise in income came from growth in self-employment income and housing benefits. Higher taxes took 0.2 per cent out of income levels, however.

On average, income per head stood at
£4,535 after tax for the three months - including free Government services such as education and healthcare.

Taking these 'services in kind' out of the equation, 'disposable income' per head was £3,769 after tax for the three months, up from £3,761 in the second
quarter. Therefore the services provided by the state contributed £13 of the increase in income per person.

These services were valued at £766 between July and September. As a frame of reference, their worth
has gradually increased from around £500 per quarter in 1997, reaching a
high in the third quarter of 2009 of £850.

‘The economic position of households’
report is a measure
the 'national well-being’, which these services affect - hence their inclusion in the quarterly publication's figures.

Piggy bank: The amount people saved in relation to available funds grew just a little; in all, households saved £21.2billion in the quarter

The figures also showed that individuals were increasingly cautious and tightened their belts in the period - everyday household
expenditure per head rose by £4 to £3,592. This
excludes house buying, purchasing luxury items (paintings, antiques) and
second-hand goods, and in kind
services.

People also managed
to save more of their money. The saving ratio - the
amount saved in relation to available funds - grew to 7.7
per cent from 7.4 per cent. This equated to households making savings
of £21.2 billion.

Before the financial crisis in 2008,
the saving ratio had been on a downwards trend, driven by high levels of
spending. However, between early 2008 and 2009, the saving ratio
increased from -0.2 per cent to a peak of 8.2 per cent. It fell during
the following year to just below 6 per cent, but hassince
drifted upwards as households have not spent the increases in their
disposable incomes generated by rising employment and falling inflation.

'Households had more real income
during the third quarter of 2012 according to ONS, which saw an increase
of £21 per head (0.5 per cent),' said Natasha-Rachel Smith, Consumer
Affairs Expert at TopCashback.

'What’s more, households actually
spent less than in the previous quarter, with real expenditure per
person decreasing by £9 (0.2 per cent), taking real household
expenditure down to £4,456.

'It is clear that despite income
being at its highest level for two years, many consumers are still
cautious with their money and any way that people can help boost their
finances is a welcome addition to household budgets.'